(a) Shawler is a small manufacturing company specialising in making alloy castings. Its main item of plant is a furnace which was purchased on 1 October 2009. The furnace has two components: the main body (cost $60,000 including the environmental provision – see below) which has a ten-year life, and a replaceable liner (cost $10,000) with a five-year life. The manufacturing process produces toxic chemicals which pollute the nearby environment. Legislation requires that a clean-up operation must be undertaken by Shawler on 30 September 2019 at the latest. Shawler received a government grant of $12,000 relating to the cost of the main body of the furnace only. The following are extracts from Shawler’s statement of financial position as at 30 September 2011 (two years after the acquisition of the furnace): Required: (i) Prepare equivalent extracts from Shawler’s statement of financial position as at 30 September 2012; (3 marks) (ii) Prepare extracts from Shawler’s income statement for the year ended 30 September 2012 relating to the items in the statement of financial position. (3 marks) (b) On 1 April 2012, the government introduced further environmental legislation which had the effect of requiring Shawler to fit anti-pollution filters to its furnace within two years. An environmental consultant has calculated that fitting the filters will reduce Shawler’s required environmental costs (and therefore its provision) by 33%. At 30 September 2012 Shawler had not yet fitted the filters. Required: Advise Shawler as to whether they need to provide for the cost of the filters as at 30 September 2012 and whether they should reduce the environmental provision at this date. (4 marks)